Recession Vs Inflation: What You Need To Understand?

What Is Recession?

What Is Inflation?

What Are the Differences Between Inflation and Recession?

You can refer to the following table to clarify the topic of recession vs inflation.

Point of Difference




It points out a general underperforming economic status. The consequences arising from a dip in the GDP for two back-to-back quarters.

It describes the hike in prices of commodities over a certain time.


Quarterly GDP, or the cumulative yield of goods or services per quarter procured from an economy, determines whether a period must be marked under recession.

The Wholesale Price Index and the Consumer Price Index together determine inflation. In WPI, manufactured commodities get greater emphasis, while CPI impacts consumer-level food items more.

Time Period

Recessions can happen due to increased unemployment, less spending power for a long time, etc.

Inflation is subjective to ongoing economic decisions. It can arise anytime.

What Are the Similarities Between Inflation and Recession?

The Final Takedown on Inflation Vs Recession?

FAQs on Recession and Inflation

What are some common causes of recession?


Every recession period gets triggered due to a unique reason. Some of the typical causes of recessions are as follows:

  • Low consumer confidence in the current economic scenario limiting their purchases only to necessary commodities
  • Revised government regulations
  • Sharp fall in the real estate market
  • Cost cutting of companies, job losses, etc.

What are the different types of inflation?


Inflation is broadly classified into three categories: 

  1. Demand-pull Inflation
  2. Cost-push Inflation
  3. Built-in Inflation

The first scenario arises when the production volume of services or commodities cannot match a mass’ expectations. In contrast, the second condition appears when production costs go up, leading to a hike in the final pricing. While the last condition gets triggered when the overhead costs of manufacturing units shoot up due to the increasing demand of workers.

Who benefits in a recession?

Business consultants, investment advisors, and top of all media personnel benefit in uncertain economic circumstances like recession. They get to market their expertise during such times to earn extra cash.

What to buy during a recession?

You can invest in dividend-paying stocks or park your cash in a high-yield savings account. Besides these, buying stock funds or real estate can be a good option.